Ammb Holdings Bhd. · MYX:AMBANK
Ammb Holdings Bhd — 9MFY2016 Earnings Presentation
45 slides from Ammb Holdings Bhd's earnings presentation, Feb 26, 2016
Slide 1: 9MFY2016 Results, Investor Presentation
9MFY2016 Results, Investor Presentation 26 February 2016
Slide 2: Retail, Wholesale, General Insurance, Islamic Banking and Life & Family Takaful priorities
Retail Wholesale General Islamic Life & Banking Banking Insurance Banking Family Enhance Recognition by To be the most To be known as Takaful customer service our customers as trusted insurer in the Islamic Bank To be a leading rhythm, build their preferred Malaysia which prospers customer centric s
Slide 3: Strategic Agenda Highlights …3Q update
Strategic Agenda Highlights …3Q update Leverage strategic partnerships & deliver on Deliver on focused organic growth acquisition • Retail – Targeted segment play • General insurance (acquisition of Kurnia) - Continue to focus on growing CASA through payroll - Leveraging on Kurnia‟s dynamic agency f
Slide 4: Headline results
Headline results 9MFY16 9MFY16 YoY growth Income RM’ mil Lower Reported Underlying1 (Underlying) impacted by performance in NIM Q3 Total compression 2,791.3 2,791.3 -13.1% income Expenses 1,553.7 1,500.0 2.3% Lower inflow of Loan growth NPLs, asset predominantly quality remains Profit mortgages
Slide 5: Performance indicators
Performance indicators Q3FY16 9MFY16 FY16 Guidance Reported Reported PATMI - RM‟ million 300.2 1,022.2 1,300 - Growth (%) -21.5%1 -27.0%2 ROE 8.0% 9.2% Circa ~ 9.0% CTI 63.5% / 57.5%3 55.7% / 53.7%3 ≤ 58% Gross impaired loans ratio 1.80% ≤ 2% Dividend 5.0 sen per share 40 – 45% payout Other details:
Slide 6: New Group CEO – Dato' Sulaiman
New Group CEO – Dato’ Sulaiman Background: Dato‟ Sulaiman who was appointed on 23 November 2015 has a wealth of knowledge backed by a total of 28 years of experience being in the forefront of growth in commercial/corporate and consumer banking and transformational programmes. An accounting graduate
Slide 7: Group CEO, Initial Action Plans
Group CEO, Initial Action Plans • Getting to know AmBank‟s customers and its people via business review sessions with senior management and their respective teams • Focus on building the performance of AmBank Group by pursuing immediate opportunities to drive revenue uplift, be more customer focused
Slide 8: Headwinds in the domestic economy
Headwinds in the domestic economy Fiscal Deficit vs Avg Oil Price & Foreign Exchange Reserves (USD' bil) 2011-2015 Exchange Rate Avg Crude Oil Price/Barrel (US$) Fiscal Deficit (%) Avg USDMYR 3.33 3.52 3.27 4.29 3.22 3.06 3.09 3.15 -4.8 -3.4 -3.9 -3.2 -5.6 -4.8 -4.5 -7.0 111 112 109 97 99 80 62 52 2
Slide 9: 2016, anticipating slower pace for the banking sector
2016, anticipating slower pace for the banking sector Loan Approval Rate in the Malaysian Banking Sector Industry loans and deposit¹ downward trend Loans Deposits 11.5% 12.9% 51.4% 11.8% 10.2% 6.7% 3.6% 49.4% 10.6% 10.2% 10.6% 0.4% 9.3% 9.2% 9.1% 9.7% 9.1% 9.5% 9.3% 9.0% 7.9% 48.5% -1.4% -1.1% -2.0%
Slide 10: 2016... selected bright spots & opportunities
2016... selected bright spots & opportunities Despite easing of banking sector growth numbers at the back of a slower but stable economic growth, with NIM and fee income remaining subdued, key financial and credit metrics of the banking industry continue to hold up well, reflecting a stable financia
Slide 11: Q3 performance lower
Q3 performance lower PATMI (RM’ mil) & ROE (%) Net lending (RM’ bil) PATMI QoQ growth: -21.5%, -7.5% underlying ROE QoQ growth: -2.2%, -0.7% underlying QoQ growth: 0.1% QoQ growth excluding Auto : 0.53% YoY growth: -0.4% PATMI Reported ROE Underlying ROE is 9.5% Loans excluding Auto Finance Total 16
Slide 12: 9MFY2016 results reflect subdued operating environment
9MFY2016 results reflect subdued operating environment PATMI (RM’ mil) & ROE (%) Total income (RM’ mil) and non-interest income (%) PATMI ROE CAGR FY11-15: 2.1% PATMI CAGR FY11-15: 5.1% CAGR FY11-15: 0.1% Total income (reported) YoY growth: -23% ROE YoY growth: -27.0%, -9% underlying YoY growth: 4.3
Slide 13: Better retail contribution, margin compression persists
Better retail contribution, margin compression persists Total income (RM’mil) • Top line performance influenced by: YoY growth -17.2% -25.9% -11.3% -13.6% -27.6% -11.1% - NIM compression: driven by softer -22.7% market and focus on better asset -13.1% 399.2 quality segments 288.8 23.
Slide 14: Targeted loans growth in preferred segments
Targeted loans growth in preferred segments Gross loans outstanding (RM’ bil) QoQ Total growth: 0.1% Retail growth: 0.4% Non-retail growth: -0.2% • Greater sales focus and relationship Retail Non-retail 87.6 86.6 87.5 87.8 85.7 86.8 86.9 management to drive loans growth • Focus in preferred se
Slide 15: Sustaining focus on low cost deposits (CASA)
Sustaining focus on low cost deposits (CASA) Deposit and CASA balance (RM’ bil) QoQ growth: 1.8% • CASA composition sustained through Customer deposits CASA CASA Composition (%) active relationship management and 21.6% 20.1% 20.5% 20.3% 21.0% 21.1% 20.4% payroll acquisition programmes • CASA balan
Slide 16: Asset quality remains good, allowances lower
Asset quality remains good, allowances lower Allowances (RM’ mil) • Credit costs improved further in the 3Q • GIL ratio improved to 1.80% from 1.95% against industry‟s expected trend on rising loan 28.9 8.8 0.2 defaults (124.5) • Adequate coverage based on current servicing 158.4 assessment discount
Slide 17: Continued emphasis on cost discipline
Continued emphasis on cost discipline Expense growth driver (RM’ mil) • Balancing between BAU expenses and 4.4% investments to deliver on the Group‟s strategic agenda 1,625.2 89.8 1,535.4 1,500.0 1,553.7 49.3 1,446.1 9.2 12.7 53.7 30.8 41.2 • Slowing income growth has seen an CTI ratio: increase i
Slide 18: Funding and capital, sound & conservative positioning
Funding and capital, sound & conservative positioning Funding composition vs. industry • Prudent liquidity management with LCRs >100% FY07 FY10 FY13 FY15 9MFY16 Industry Ave for all banking entities Equity & debt 10% 15% 14% 15% 23% 15% • Higher composition of stable medium term capital funding vis-
Slide 19: Wholesale Banking, subdued activities in loans & capital markets
Wholesale Banking, subdued activities in loans & capital markets • QoQ, income higher as fixed income trading picked up, QoQ PAT (RM’ mil) offset by lower recoveries and weaker loans momentum QoQ growth: -22.42% • Capital markets fund raising better in 3Q • Decline in corporate loans driven by low
Slide 20: Retail Banking, focus is on main bank relationships & CASA
Retail Banking, focus is on main bank relationships & CASA QoQ PAT (RM’ mil) • PAT growth of 13.8% YoY reflecting improvement in asset QoQ growth: 61.6% quality • Retail continues to focus on expanding mortgage business. Excluding the auto finance segment, gross loan growth was 4.9% • „Small Busin
Slide 21: Retail's Small Business Banking (SBB) update
Retail’s Small Business Banking (SBB) update • AmBank‟s SBB was rolled out nationwide in mid 2014, delivering a „total banking solution‟ to SMEs, saving our customers time and money on banking transactions whilst assisting to grow their businesses via comprehensive „BizReview‟ A total banking soluti
Slide 22: General insurance, reflecting higher claims experience and lower investment income
General insurance, reflecting higher claims experience and lower investment income QoQ PAT (RM’ mil) • Gross written premium was flat QoQ with growth in fire and personal accident offset by lower motor business QoQ growth: -56% • Lower PBT QoQ from higher claims experience and expenses • Priorities
Slide 23: AmBank Group FY16 Considerations and Expectations
AmBank Group FY16 Considerations and Expectations Sound asset quality, Lower Q3 Disciplined lending in focusing on recoveries performance amidst a targeted sectors to and collection challenging economy continue efficiency Pricing competition to Conservative funding Active management of continue stre
Slide 24: Appendix
Appendix Your Bank. Malaysia’s Bank. AmBank. 9MFY2016 Results – Investor Presentation
Slide 25: Appendix – Income Statement
Appendix – Income Statement 9%YoY growth -13.7% -35.3% -22.7% -4.4% -37.7% >100% -28.2% -31.8% -27.2% -30.5% -27.0% 2,104.4 4% 1,815.7 4% 14% 96% 96% 86% 85% Net Non- Total Provisions/ Tax & RM’ mil Interest Interest Expenses PBP PBT PAT MI PATMI Income Allowances Zakat Income I
Slide 26: Appendix – Net interest margin
Appendix – Net interest margin NIM and COF (YoY) 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% SRR 3.38% 3.13% 3.10% 3.10% 3.09% 3.17% 2.98% 2.94% 4.00% 4.00% 4.00% COF 4.00% 3.00% 3.00% 3.00% 3.00% 3.25% 3.25% 2.92% 3.13% 3.10% 3.10% 3.09% OPR 2.98% 2.94% 2.75% 2.75% 2.43% 2.92% 2.68% 2.72% 3.00% 2.68% 3.00%
Slide 27: Appendix – Loans by sector vs. Industry
Appendix – Loans by sector vs. Industry Dec’15 YoY Loans by purpose Composition AmBank Group Dec-15 RM’ bil growth Purchase of transport 22.4 -9.5% 25.8% Loans by Sector vehicles Loans Working capital 25.1 +12.9% 28.9% composition 4.9% 3.5% 9.9% 0.6% 4.3% 5.0% 3.1% 4.0% 9.7% 1.8% 52.6% 0.5% Purchase
Slide 28: Appendix – Deposits by sector vs. Industry
Appendix – Deposits by sector vs. Industry AmBank Group Dec'15 Core Deposits Composition YoY growth (AmBank Group) 0.7% 0.4% 0.5% 1.2% 1.0% Savings 6% RM‟ bil Current Account 15% 90.9 72.3 Fixed Deposits 79% 13.4 18.5 5.2 Savings Current Account CASA Fixed Deposits Core Deposits Industry D
Slide 29: Appendix – Auto Finance
Appendix - Auto Finance Auto Finance loans vs industry vehicle sales Auto Finance monthly balance vs. net outflows 27 350.00 AMMB disbursement (RM) Industry vehicle sales (No.) 26 300.00 25 250.00 24 200.00 23 150.00 22 100.00 21 20 50.00 19 0.00 Jul-14 Jul-15 Aug-14 Aug-15 Jun-14 Nov-15 Apr-14 May-
Slide 30: Appendix – Retail Banking
Appendix – Retail Banking Income Statement (RM’mil) YoY growth -12.5% 0.8% -27.3% -103.0% 12.3% 7.8% 13.8% 9MFY16 PAT (composition to Group) 32% Provisions/ RM’ mil Total Income Expenses PBP PBT Tax & Zakat PAT Allowances 9MFY16 1,138.9 691.6 447.3 -6.2 453.5 108.0 345.6 9MFY15 1,301.2
Slide 31: Appendix – Wholesale Banking
Appendix – Wholesale Banking Income Statement (RM’mil) 9MFY16 PAT YoY growth -13.5% -17.2% -11.4% -53.1% -17.9% -24.5% -15.7% (composition to Group) 54.7% 56% Provisions/ RM’ mil Total Income Expenses PBP PBT Tax & Zakat PAT Allowances 9MFY16 1,087.1 376.3 710.8 -69.8 780.6 175.1 605.5
Slide 32: Appendix – Insurance and Group Funding & Others
Appendix – Insurance and Group Funding & Others Income Statement - Insurance (RM’mil) YoY growth -19.6% 3.4% -39.1% >100% -47.5% -65.7% -41.9% 9MFY16 PAT (composition to Group) 11% Provisions/ RM’ mil Total Income Expenses PBP PBT Tax & Zakat PAT Allowances 9MFY16 366.4 216.2 150.2 4.6
Slide 33: Appendix – Islamic Banking
Appendix – Islamic Banking Income Statement (RM’mil) YoY growth -2.8% 27.0% -30.4% -84.0% -2.9% 10.9% 7.0% 9MFY16 PAT (composition to Group) 16% Provisions/ PATZ RM’ mil Total Income Expenses PBP PBT Tax & Zakat Allowances FY16 9MFY16 671.1 420.9 250.2 19.5 230.7 59.2 171.4 9MFY15 690.
Slide 34: Appendix – Funding sources and maturity profile
Appendix – Funding sources and maturity profile Funding diversity underpinned by Fixed deposits: RM72.3 billion LDR1 of 82.8% CASA: RM18.5 billion (strong retention) Supplemented by term funding & debt capital AMMB Holdings Berhad AmBank (M) Berhad AmBank Islamic Berhad AmBank (M) Berhad & AmBank Is
Slide 35: Appendix – ANZ & AmBank Group Partnership
Appendix – ANZ & AmBank Group Partnership Partnership with ANZ since 2007 ANZ diversified footprints in Asia Value proposition • Seconding ANZ staff into key roles • Providing technical expertise • Support new product development • Two-way customer referrals • Joint account planning • Access to regi
Slide 36: Appendix – AmGeneral Partnership
Appendix – AmGeneral Partnership Partnership with IAG IAG diversified footprints in Asia Value proposition • Involved in the management of AmGeneral Insurance, offering skills transfer, partnership and relationship models of IAG • Adding value through claims re-engineering savings, increased revenue
Slide 37: Appendix – Distribution channels
Appendix – Distribution channels Nationwide Branch Network Branches ATM RO Perlis 1 4 Perlis Kedah 6 29 Kedah Pulau Pinang 14 49 1 Kelantan Pulau Pinang Perak 18 47 Terengganu Sabah Labuan Selangor 38 242 Perak Brunei Darussalam Kuala Lumpur 23 132 2 Pahang Selangor Putrajaya 1 3 Kuala Lumpur Negeri
Slide 38: Appendix – Shareholding structure & franchise value
Appendix – Shareholding structure & franchise value 23.8%1 AmCorp 13.0% EPF 16.5% Others 46.7% As at 31 December 2015 AMMB Holdings Berhad Life Assurance & Retail Banking Wholesale Banking Islamic Banking General Insurance Takaful 100% AMAB Holdings Sdn Bhd 100% AmBank (M) Berhad 51% AmGeneral 49% 1
Slide 39: Appendix – Banking sector share price movement / target price and recommendations
Appendix – Banking sector share price movement / target price and recommendations Banking Sector Share Price Movement Upgraded ratings Ratings FY2007 FY2015 HLBK 97.6% +3 AmBank (M) RAM LT: A2, ST: P1 LT: AA2, ST: P1 PBB 95.2% Outlook: Stable Outlook: Stable LT: BBB-, ST: A- RHB Cap 20.1% S&P LT: BB
Slide 40: Appendix – Key economy indicators: As per 9MFY2016
Appendix – Key economy indicators: As per 9MFY2016 GDP, consumption and investment growth CPI and unemployment rate 3.9% Business confidence index FDI flow points Business Conditions Index Source: BNM, MIER, Department of Statistics & Bloomberg Your Bank. Malaysia’s Bank. AmBank. 9MFY2016 Results –
Slide 41: Appendix – Banking system data: As per 9MFY2016
Appendix – Banking system data: As per 9MFY2016 Household debt, national savings and retail Household debt movement impaired loan ratio Annual Change 100.0% To be updated for the his 87.9% 86.7% (%) 81.3% 16.0 13.8 74.5% 76.2% 80.0% 14.0 1.4 11.5 12.0 9.9 60.0% 3.2 2.3 10.0 34.6% 1.7 34.2% 33.0% 31.
Slide 42: Appendix – Banking system data: As per 9MFY2016
Appendix – Banking system data: As per 9MFY2016 Capital ratios Capital activities RM‟bil Basel II Basel III Beginning January 2013, capital components are reported based on Basel III Capital Adequacy Framework Loan growth Deposit growth RM‟mil 8.3% 7.9% 7.4% MarJunSeptDecMarJunSeptDecMarJunSeptDecMa
Slide 43: Appendix – Economic Transformation Programme: As per H1FY2016
Appendix – Economic Transformation Programme: As per H1FY2016 ETP Overview Achievement of 12 NKEAs in 2013 and 2014 2020 Target KPI Scoring* GROSS NATIONAL JOBS NKEAs INCOME GNI New Jobs 2014 2013 (RM’bil) • RM48k (USD15k) GNI Greater KL/ Klang Valley 190 320,000 103% 98% • 31.6m population per capi
Slide 44: Glossary / Disclaimer of warranty and limitation of liability
Glossary /Disclaimer of warranty and limitation of liability Reported Performance Reported performance refers to the financial performance as reported in the audited financial statements and disclosed to the market One Offs One offs comprise those impacts on financial performance that arise from cha
Slide 45: Glossary/Disclaimer of warranty and limitation of liability
Glossary/Disclaimer of warranty and limitation of liability The material in this presentation is general background information about AmBank Group‟s activities current at the date of the presentation. It is information given in summary form and does not purport to be complete. It is not intended to
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